Problem
Tax Ethics Case - Substantial Authority
Pamela Thompson is preparing a tax return for a client that includes a vacation rental home which is not subject to the Sec. 280A limitations because the personal usage (32 days) was less than 10% of the 333 days the property was rented. Pamela would like to deduct the interest expense on the vacation home related to the 32 personal days but she is concerned that since the home is treated as a rental property, the interest related to personal days non-deductable consumer interest. Her research uncovers 8 articles in professional journals that conclude such amounts are personal interest, and one article concluding that such amounts as investment interest. The Code, Regulations, and court cases are silent on this particular issue, although the editors of one of the tax service conclude that it is personal interest. Could Pamela take the position that the interest is investment interest, relying on the one article?